STUDENT ZONE Chapter 2 Strategic Human Resource Management John Bratton CHA TER O!ER!

"E# In Chapter 1, we examined the theoretical debates on the nature of the HRM. Chapter 2 discusses the concept of strategic HRM ( HRM! and explores "arious themes associated with HRM. It begins with introducing the student to the traditional prescripti"e strategic management model, the #$% model. %he chapter then goes on to examine competing HRM models& the 'matching( model, the 'control)based( model, the 'resource)based( model and an 'integrati"e( model, before re"iewing some important dimensions associated with HRM& organi*ational performance, re)engineering, leadership, wor+place learning and trade unions. Chapter o$%ecti&es ,fter reading this chapter, -ou should be able to& .xplain the meaning of strategic management and gi"e an o"er"iew of its conceptual framewor+. /escribe the three le"els of strateg- formulation and comment on the lin+s between business strateg- and human resource management. .xplain three models of HR strateg-, control, resource and integrati"e. Comment on the "arious strategic HRM themes of HR)performance lin+, re) engineering, leadership, wor+place learning and trade unions. CHA TER OUT'"NE "ntro(uction trategic planning model shows how corporate and business le"el strategies, as well as en"ironmental pressures determine the choices of HRM structures, policies and practices. , number of important 0uestions are addressed& How do higher)le"el corporate decisions affect HRM1 Is it possible to identif- a cluster or 'bundle( of HR practices with different strategic competiti"e models1 /o firms that adopt certain bundles of HR practices experience superior performance1 Strategic management /efinition& strategic management refers to a pattern of managerial decisions and actions that determines the long)run performance of the organi*ation.

trategic management re0uires constant ad2ustment of three interdependent poles, figure 2.1. HRM in ractice 2)* Raising the Profile of the HR Agenda this example emphasi*es the importance for managers and HR professionals of understanding the lin+s between business strateg- and HR strateg-. Mo(e+ o, strategic management %he prescripti"e management literature describes man- different strategic planning models. Most howe"er replicate what we ha"e done, the- reduce the basic idea to the #$% model. Model reduces the strategic management process into fi"e neatl- delineated steps (see figure 2.2!. Hierarch- o, strateg%he prescripti"e model depicts different le"els of strateg-& corporate, business, and functional. trategies must be integrated. Business.+e&e+ strateg- an( HRM ,t functional le"el, HR strateg- is formulated and implemented to facilitate the business strateg- goals. 3usiness)HRM lin+s are classified in terms of +o/.cost0 (i,,erentiation and ,ocus. 4our simple business)le"el strategies are discussed with rele"ant examples& +o/.cost +ea(ership strateg- (e.g. #al)Mart10 Di,,erentiation strateg- (e.g. %omm- Hilfiger!, 2ocuse( +o/.cost +ea(ership strateg- (e.g. Rent)a) #rec+ car hire! and 2ocuse( (i,,erentiation (e.g. Mountain .0uipment Co)operati"e!. Miles and now(s (1567! strategic models are examined& De,en(ers0 rospectors0 Ana+-3ers an( Reactors) roacti&e - HR specialist helps formulate strateg-. Reacti&e . HR function is full- subser"ient. ome models emphasi*e the importance of the en"ironment as a determinant of HR policies and practices. HRM in ractice 2)2 - Culture Shift Invigorates Dell %his report illustrates a culture change and the adoption of an alternati"e business strateg- at /ell computers. Strategic HRM SHRM +iterature is rooted in manpower 8sic9 planning.

Strategic HRM is described as the process b- which managers see+ to lin+ human assets to the strategic needs of the organi*ation. HR strateg- is discussed in terms of an 'outcome( : the pattern of decisions relating to HR policies and practices. The 2our.tas4 mo(e+ of HRM pro"ides the rationale that guides the strategic choice of HR policies and practices. %he en"ironment as a determinant of HR strateg- is examined as is the notion of 'upstream( or 'first)order( strategic decisions. HR approaches are 'third)order( strategic decisions. The matching mo(e+ In /e"anna(s et al model, HRM strateg- and structure are lin+ed to and influenced ben"ironmental forces, figure 2.;. %his model proposes that HRM should be concerned with matching the <fi"e ps= which reinforce emplo-ee role beha"iour for each generic >orterian competiti"e strateg-. %he notion of 'fit( is also a central tenet of 3eer(s et al model (refer -ou bac+ to chapter 1 and figure 1.?! @imitations of the matching model. Conceptua+ ) predicted upon the rational "iew of strategic decision)ma+ing. Empirica+ ) limited empirical support for the model Human resource strateg- mo(e+s %his section of the chapter examines the lin+ between business strateg- and HR strateg-. HR strategies are the pattern of decisions regarding HR policies and practices used bmanagement to design wor+, select, train and de"elop, appraise, moti"ate and control emplo-ees. %hree models to differentiate 'ideal t-pes( of HR strategies& a! Controlled)based model b! Resource)based model c! Integrated model Contro++e(.$ase( mo(e+ discusses management structures and HR strateg- as instruments to control all aspects of the labour process in order to secure higher efficienc- and profitabilit-. Indi"idual, bureaucratic and technical controls are discussed. a! Process-based control adopted when mean)ends relation are certain b! Outcome-based controls adopted when means)ends are less certain

Resource.$ase( mo(e+ emphasi*es the strategic "alue of human assets and continuous wor+place learning. #hereas the matching HRM model focuses on external '$pportunities( and <%hreats( (from #$%!, the resources)based HRM model focuses on the strategic significance of internal ' trengths(. $rgani*ations can identif- which resources are potentiall- strategic b- using 3arne-(s (1551! criteria& a! "aluabilit- b! rarit- c!inimitabilit- d! substitutabilit-. %he organi*ation(s resources and capabilities shape strateg- (see figure 2.A!. a1 'imitations o, resource.$ase( mo(e+ 5 conceptua+: conceptual "agueness, imbalance gi"ing too much attention to internal resources at the expense of external competition) Empirica+: little e"idence that man- firms ha"e adopted the 'learning organi*ation( or 'soft( HRM model. b! Integrati"e Model characteri*es two dimensions of HR strateg-& a! ,c0uisition and de"elopment focuses on internal human capital b! @ocus of control focuses on monitoring emplo-ees( compliance %wo dimensions (a and b! -ield four ideal t !es of dominant HR strategies: commitment0 co++a$orati&e0 paterna+istic and tra(itiona+) HRM in ractice 2)6 5 Airline ho!es to cut costs" regain mar#et share Case illustrates how a Borth ,merican airline, ,ir Canada, introduced a low)cost leadership business strateg- (Cip ,ir Inc! and a low)cost HR strateg- to achie"e its strategic goals. Can -ou thin+ of an- .uropean examples of low)cost leadership business strategies1 E&a+uating SHRM an( HR StrategCritical organi*ational theorists ha"e 0uestioned the linear and 'rational( choice model because lac+ of information, time and 'cogniti"e capacit-(. HRM and HR strateg- thesis focuses too much on the lin+ between external mar+eting strategies the HR function and pa-s insufficient attention to internal operating strategies. %he notion that a commitment HR strateg- follows from a real or percei"ed 'added "alue( competiti"e strateg- is plausible in theor- but problematic in practice. Managerial beha"iour is influenced also b- the indeterminac- of the emplo-ment contract. ,chie"ing the goal of 'close fit( of business and HR strateg- ma- contract the goal of emplo-ee commitment and cooperation. %he foregoing anal-sis suggests that there is 'no one best wa-= of managing contradictions.

Dimensions o, Strategic HRM %his part of the chapter examines fi"e important themes associated with HRM. #ith the exception of leadership, the- pro"ide an introduction to the following chapters in the text. 1. Organi3ationa+ per,ormance - examines the HRM)firm performance lin+ and introduces -ou to some of the methodological challenges of measuring the impact of HRM that are examined in more detail in Chapter 17. 2. Organi3ationa+ architecture - it is claimed that the process leads to flatter organi*ational structures, 'reengineering(, redesigned wor+ teams, use of I%, senior management commitment. ?. 'ea(ership - considered important in the 'soft( HRM model in order to de"elop a high le"el of emplo-ee commitment and cooperation. 7. #or4p+ace +earning - posited to be a central building bloc+ in the resource)based HRM model and in the 'learning organi*ation(. ee also Chapter 5. D. Tra(e unions - draws attention to the contradictions between the normati"e HRM model and trade unions and introduces the debate on 'partnership( between management and unions see also chapter 11. EN7A7"N7 "N CR"T"CA' TH"N8"N7 RE'ECT"!E 9UEST"ON:ESSA; 9UEST"ON

Is the resource)based HRM model distincti"e1 How does this model relate to the debate on 'hard( and( soft( "ariants of HRM1 HE'

%his 0uestion re0uires -ou to e"aluate strategic HRM models. Eou ma- wish to suggest that a comprehensi"e answer would define strateg- and explain HRM)business strateglin+s. $ne wa- for -ou to explain the difference between the HRM models is to use the #$% approach. %he matching model emphasi*es external 'opportunities( and 'threats( facing the firm, whereas the resource)based model draws attention to internal 'strengths(. 3arne-(s (1551! four criteria for identif-ing potential strategic resources should be discussed& a! "olubilit- b! rarit- c! inimitabilit- (d! substitutabilit-. It ma- be suggested that a focus on external forces mirrors the 'hard( HRM model. %he resource)based approach, with its focus on '+nowledge capital( and learning reflects man- of the features contained in the 'soft( "ersion of HRM. @oo+ at 4igure 2.6 and consider the merits of 'commitment HR strateg-( "ersus 'traditional HR strateg-(.

CHA TER CASE STUD;< A"R NAT"ONA' %his case can be used to illustrate the HRM)business strateg- lin+s. %he case is based upon %re"or Colling(s 155D article, <.xperiencing turbulence& competition, strategic choice and the management of human resources in 3ritish ,irwa-s= and post eptember 11, 2FF1 newspaper reports on restructuring in the airline industr-. @oo+ at 'HRM in >ractice 2.?(, which discusses a new business and HR strateg- recentl- introduced b- ,ir Canada. Gisit ,ir Canada(s #eb site and, in particular, the compan-(s new ser"ices. Bote the union)management implications and the different reward s-stems for ,ir Canada(s new business strateg-. ,lso lin+ case stud- to four HR strategies depicted in figure 2.6